Hospitality

The Company

The Entreprise de Gestion Hôtelière El Aurassi (EGH El Aurassi) is a hotel management company. It comprises four hotels, the Hôtel El Aurassi Hotel, a five-star hotel in the centre of Algiers, and three others facilities located in southern Algeria: Hôtel Rym in Béni-Abbès, Hôtel El Mehri in Ouargla, and Hôtel El Boustene in Ménéa. The latter three establishments became affiliated with EGH El Aurassi more recently, in January 2010, in accordance with a decision made by the government.

While the Hôtel El Aurassi opened its doors in 1975, it did not become public joint-stock corporation until 1991 – capitalised at AD40m (€372,000) and fully owned by the state. In 1995 the share capital was increased to AD1.5bn (€13.95m) thanks to the incorporation of the company’s reserves. In 1999 the hotel launched a public offering for the sale of 20% of its share capital before listing on the Algiers Stock Exchange in February 2000.

The Hôtel El Aurassi provides accommodation and catering services, in addition to hosting conferences and meetings. Over the years the hotel has seen a wide range of historic events, including the 1981 OPEC summit and the Arab presidential summit in 1988. The hotel is also much sought after for weddings, as its facilities offer a panoramic view of the bay. Additionally, a public school focusing on tourism and hospitality is located on the premises.

In terms of accommodation, the hotel has 604 beds and 453 bedrooms, in addition to four restaurants with a combined 1000-person capacity. The Hôtel El Aurassi also features one swimming pool with a barbecue spot, as well as five tennis courts, one nightclub, a fitness room and a piano bar.

From a financial perspective, EGH El Aurassi performed well in FY 2013. Total revenues were up 46.3%, though the company’s net earnings fell by 32%. Refurbishments, launched in 2013, are focused on the hotel’s southern units. Revenue from the company’s core activity reached AD2.33bn (€21.67m) in 2013, a more than 55% increase over the AD1.51bn (€14.04m) seen in 2012. This strong year-on-year growth in core revenues is partly the result of the refurbishments – indeed, the Hôtel El Aurassi only reopened its doors in 2012.

Accommodation activities produced around AD1.03bn (€9.58m) in revenue, 98% of which came from the Hôtel El Aurassi, where room rates stood at AD24,500 (€227.85) per night. The number of overnight stays reached 65,628 over the year, equivalent to 38% occupancy. The company’s catering segment brought in AD973m (€9.05m) in revenues, with AD762m (€7.09m) coming from the Hôtel El Aurassi. The hotel also contributed the lion’s share of revenues from auxiliary activities, which totalled AD138.5m (€1.29m) in 2013.

Development Strategy

The company continues to benefit from a series of government measures aimed at modernising the country’s hotel infrastructure and preserving jobs. The government initiative has focused on financial stabilisation and low interest rates, as well as financing for the modernisation project, with a 15-year payback delay.

The rehabilitation programme on the Hôtel El Aurassi began in November 2009 and concluded in March 2012. The total outlay of this program amounted to €79.1m, up to AD6.03bn (€56.08) of which was financed by Crédit Populaire d’Algérie (CPA). The southern units have also been the object of an AD1.93bn (€17.95m) modernisation programme, entirely financed by the public Treasury and CPA EGH El Aurassi has set a goal of AD2.41bn (€22.41m) in revenue with a 40% average occupancy rate and 30% restaurant visit rate for FY 2014. The average room price will be fixed at AD16,800 (€156.24), while the average cost of a restaurant visit will be around AD5750 (€53.48). Operating expenses are forecast at around AD1.66bn (€15.44m), at a rate of 69%, and net earnings are predicted to reach AD646.5m (6.01m), for a 27% return on sales.

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The Report: Algeria 2014

Financial Services chapter from The Report: Algeria 2014

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